October Jobs Report: gear change or a different speed?

In one of those many moves that shows the US economy can be full of surprises there was a major shift from the September Jobs Report from last month’s weak numbers from 29,000 to 165,000 giving praise, and maybe some wonder, from all quarters when the Labor Dept announced the good news on Friday, especially since most markets had predicted between a low of 59,000 and a high of 60,000.

The customary revisions due to the data collection period, earlier, rather than later, gave “a total of 84,000 jobs added: August was revised upwards by 53,000 to 186,000; and September gains totaled 60,000, up from 29,000,” reported CNN.

The increased labor force participation rate gave the higher numbers, and to perhaps the consternation of some, the increase was largely attributable to AI -- its construction of facilities and trained personnel that can manage the huge systems.

As has been seen before the heavy hitters were healthcare and social assistance as robust as ever with 55,100 jobs and business and professional services topping after several previously reported numbers at 70,000 jobs, mostly in AI employment giving some wariness to total condemnation of the burgeoning industry by those lawmakers and protestors fearing unemployment and a deterioration of water and energy supplies.

Once again we have the AI effect with manufacturing  adding 25,000 workers, transportation and warehousing increasing to 24,500 in anticipation of holiday shoppers, and temporary workers jumping to 18,600, as always a way of employers anticipating and predicting if there is room for more permanent hires further along the hiring stream, all of which bear watching in the fourth quarter.

Stopping to take a look at AI, in an interview with CNBC, was Kevin Hassett, director of the National Economic Council and according to The New York Times it said “the main focus of Mr. Hassett’s interview was the tumult in financial markets around artificial intelligence and data centers, after Tuesday’s election swept into office a group of  lawmakers who may more tightly regulate the industry. Voters also approved a series of new ballot measures putting a halt to data center development in their communities.”

In what may be a real battle with the new lawmakers is not only increased regulation, but construction of data centers that could cast a pall on these 70,000 workers in the future, and, perhaps somewhat nervously, “Mr. Hassett said they “respect the localities that decide that’s what they want to do, but America is a big place,” noting that data centers under development now may not be affected by those ballot initiatives. He said there was “plenty of room” elsewhere for those computing facilities.”

The unemployment rate slipped from 4.2 in September to 4.1 in October generating a level of optimism in many quarters, but a mixed reaction from some economists who prefer to see beyond one report.

If there is a seesaw effect, then that may be due to some of the shifting currents beneath the surface, “Tyler Schipper, associate professor of economics at St. Thomas University in Saint Paul, Minnesota, [who] cautioned that some of those categories have been “noisy” in recent months,” added, to CNN, “Part of my hesitance comes from, if we look at the three-month average of job growth right now, it’s pretty similar to where it was earlier in the year,” he said. “And then it dropped back down pretty dramatically over the summer and the early fall.”

“So, is this the beginning of a trend, or are we going to see what we saw earlier this year, where things pick up and then they drop off a little bit?”

One concerning point from the report was,”The number of people employed part time for economic reasons increased by 339,000 to 4.8 million in October. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.”

A sobering report from The New York Times was its analysis based on the data points that “Nearly 2 million Americans have been out of work for more than six months, the standard definition of “long-term unemployment.””

Noteworthy is that “The number of long-term unemployed (those jobless for 27 weeks or more), at 2.0 million, changed little over the month. The long-term unemployed accounted for 27.6 percent of all unemployed people,” Labor said.

Others are far more sanguine: “Today’s jobs report is a strong rebuttal to fears that the economy is heading into a meaningful slowdown,” Seema Shah, chief global strategist at Principal Asset Management, wrote Friday.”

“You have to look pretty hard to find something to dislike in there,” Dan North, senior economist at Allianz Trade North America,” to CNBC, “It’s a really, really good report, and all around I think you’d say it’s stronger than expected and the best one in a while, and it kind of fits with what I call the stable but perhaps unexciting labor market.

For Black Americans the unemployment rate “fell four tenths of a point to 6.6 percent, partly reversing a big jump in September. The monthly figures are noisy, and economists cautioned against taking the earlier increase at face value. But even after the October decline, the Black unemployment rate has been creeping higher, and is far above the 3.7 percent rate for white workers,” according to The New York Times, giving pause to many Black professionals, particularly women who lost their jobs during the first months of the Trump administration with its DOGE firings.

“The disappearance of diversity, equity and inclusion positions in big companies has heavily affected Black women; a federal government firing spree that eliminated hundreds of thousands of jobs had a heavy impact on Black workers, who are disproportionately represented on federal payrolls; and the slowdown in white-collar hiring rates has felt particularly acute for some Black businesspeople without elite networks as expansive as those of their white and Asian peers.”

Taking another look under the hood we see this from the report: “Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force changed little at 1.6 million in October. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, also changed little over the month at 448,000.”

This data points to the ongoing “low fire-low hire” that we are seeing over the last several months. Also, the fly in the ointment is wages. While,“average hourly earnings increased 0.4% on the month and 3.1% annually, compared with respective estimates for 0.3% and 2.9%,” it is marred by inflation at 3.7 percent.”

American working families are burdened with inflationary costs from the Iran War and tariffs from the Trump administration, especially affecting states like Michigan and Maine with borders on Canada.

The auto industry in Michigan, principally in Detroit, is integrated with Canadian imports for construction and manufacturing and the fishing industry in Maine is in trade with the northern neighbor of the US, to name but a few, but the salient point are higher prices for US consumers.

The recent midterm elections tipping the scales to the Democrats was a report card on the Republican party, and in particular towards President Trump whose statements before his second turn in office promised lower prices have upset voters who feel a sense of betrayal in this intersection of politics and economic interests.

All eyes are not only on next week’s CPI report but also interest rate action by the Federal Reserve and “Traders increased the probability of another quarter percentage point hike when the Federal Open Market Committee meets Dec. 8-9. Odds rose to 76.8%, according to the CME Group’s FedWatch tool, though the indicator pointed to only one more increase after. The odds of further hikes in 2027 have fallen somewhat in recent days, after the midterm election rout and Thursday’s sell-off in tech stocks,” and that, in and of itself, may show that as the traders predict the Federal Reserve will continue along its path of dealing with inflation, since it is far above its 2 percent standard.

Affordable housing as most Americans know is a challenge and especially for home buyers and as Zillow noted, “Stable employment and wage growth give households the confidence to buy a home or sign a new lease, but the housing market is already feeling the chilling effects of the recent surge in mortgage rates.” 

“With mortgage rates above 7%, affordability headwinds in the housing market may still feel insurmountable — even for those who have a job or recently found one. This is consistent with our expectation for a more substantial decline in existing home sales and slower growth in home value in Q4,” they added.

Facing both political and economic challenges the American economy is at the crossroads, and the future is far from certain.

September Jobs Report: a precarious hold

Peggy Lee once crooned the famous refrain from her legendary hit song “Is that all there is?” and after Friday’s US Labor Dept. September Jobs report many readers, economists, and labor leaders were wondering the same thing, with the report of 29,000 non-farm jobs, since 90,000 jobs were expected. And, while Ms. Lee sang about breaking out the booze, and dancing, none are to be had despite the general rule among professional economists to not focus on one report. Nonetheless there is some overall concern, and chief among them is how long this “low fire-low hire” market can last, supported by high income earners.

There is cautious optimism by some who feel that the American economy has sustained a lot of bumps and bruises: from the Great Recession to the pandemic, enduring inflation, (peaking at 3.4 percent at the end of August) causing pricing increases across the board, plus the US led war on Iran and its attendant gasoline prices.. That does give some solace, but one unexpected bump or crisis can create havoc for American families.

In July we reported this May discussion from The Hiring Lab, and it still rings true: “This kind of equilibrium can’t hold indefinitely. A market frozen between low hiring and low firing is only stable as long as nothing pushes on it. Should demand soften, the lack of hiring leaves no cushion to reabsorb workers who lose their jobs, and what now reads as a quiet labor market could tip into a rising unemployment rate quickly.”

The greatest cause for concern are wages which have not kept up with inflation and at an increase of just 0.3 percent, calculated on a year-over-year basis, the math is easy; and taking into the high cost of housing, food, gasoline and diesel to get goods to the supermarket, the result is a Damcoleus sword hanging over many American heads. And, making it all more perilous is that consumers are the drivers of the American economy with prices rising 0.4 percent from July 2026 to August 2026.

“KPMG chief economist Diane Swonk has argued that payroll growth is losing altitude without the labor market having stalled, leaving less margin for error if demand weakens further,” according to crowdfundinsider.com.

On the market side the 10 year yield increase of 5.34 percent on Treasuries is driving up the cost of a mortgage from that once comfortable 30 year at 6 percent to 7.28, meaning that many people are going to stay put and avoid even mortgaging an existing home. To note, "this is up from 7.03 percent last week and the highest since November 2023, the mortgage financing giant Freddie Mac said Thursday.”

We have seen a rise in manufacturing and construction, but again this is mostly attributable to constructing AI centers and with the public clamoring for restraints, and even halts, this bubble could burst.

The good news is that the Federal Reserve is unlikely, when they meet this month, to raise interest rates; and, especially after their recent quarter point increase, they can afford to take their time for further action, while they study the data.

While the unemployment rate of 4.2 shows relative stability over the last several months it’s not enough to sustain fears; but, one caveat was that while it shows relative stability over the long term it could become meaningless with the above headwinds.

The heavy hitters are still health care at 17,000 gains, reflecting the surge of baby boomers retiring, and living longer than their parents, but those gains were modest, compared to previous months, “We’re seeing healthcare hiring slow,” Kory Kantenga, chief economist at LinkedIn who told CNN in an interview. “If we keep going in the direction that we’re going today, it’s certainly a more fragile labor market.”

Construction at 11,000, again modestly surging due to date center construction and manufacturing increasing to 9,000, another slight increase from a once moribund area.

“Both the labor force participation rate, at 61.8 percent, and the employment-population ratio, at 59.2 percent, changed little in September. These measures showed little net change since January,” according to the report, while some economists saw this as an omen that the crystal ball might need adjusting.

“Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force decreased by 236,000 to 1.5 million in September. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little over the month at 414,000,” all of which portends a stable, if precarious outlook.

Amidst the tumult of noise, “Taylor Rogers, a spokeswoman for the White House, touted the new jobs report as a sign of the strong economy. In a statement, she focused on a few positives, including the uptick in labor participation and the addition of manufacturing and construction jobs.

“The economy added 9,000 manufacturing jobs and 12,300 factory construction jobs over the month — proof that President Trump’s reindustrialization agenda is working,” she added, reported The New York Times.

In a follow-up they also reported, “Asked if he found the jobs figures disappointing, Kevin Hassett, the director of the White House National Economic Council, told Fox Business, “No, not even a little bit.”

With President Trump’s falling approval rate and general dissatisfaction among his supporters, there seems to be a conundrum from the administration, with the November midterms just around the corner, especially since this is the last report before then.

Hassett said there was good news in the data, particularly in the uptick in construction jobs, which he attributed to President Trump’s agenda. He said that the building of factories in particular had helped to boost growth, and the resulting boom “puts downward pressure on inflation.”

For Blacks there was a nearly double digit increase in unemployment 7 percent in September, “up a full percentage point from August and nearly double the 3.6 percent rate for white workers,” and despite some lows early in the mid aughts, “has edged up gradually since, hitting about 6 percent last spring. It then began to rise more quickly, hitting 8.2 percent last November.”

“The public sector – primarily state and local governments – shed jobs last month as did white-collar industries such as information (tech), professional and business services, and financial activities,” added CNN and also that,”Notably, temporary help services (which had a net loss of 10,900 jobs) drove the decline in the professional services sector.”

“This may signal weakening demand for hiring in the coming months,” ZipRecruiter economist Nicole Bachaud wrote Friday. “Instead of changing headcount for their permanent workforce, employers often turn to temp services to scale up and down more quickly, to be able to respond to changing economic conditions.”

In the long run, what we see, and what we don’t see seem to be key economic indicators.

August Jobs Report: Optimism, or a mixed bag?

For those old enough to remember the 1960s sitcom, “The Andy Griffiths Show,” there was the unforgettable character of Marine Sergeant Gomer Pyle, who when surprised, or startled, would yell out "Well, gollee!"; and that was the reaction from many economists, lawmakers, and pundits after Friday’s Labor Department released the August job figures that showed 162,000 non farm jobs; a figure that surprised almost everyone with an anticipated 56,000, or at most 62,000; and, while this was welcomed in many quarters, a closer look reveals much, but it’s important to remember that one report is just a snapshot in time, not a predictor of future outcomes.

Nevertheless there are some notable developments, a rise in manufacturing, mostly attributable to non-residential construction of data centers, and local education, a seasonal bump from the beginning of the school year with teachers and other personnel returning to work after the summer break; but, joined with a slight increase among leisure and hospitality, and stable numbers for health care workers, it does show that the American jobs outlook is stable - perhaps too stable for Federal Reserve rate cuts.. 

“Those sectors added 59,000 and 42,000 jobs, respectively. Payroll gains in August were more than five times the monthly average for the last 12 months, which is 31,000, according to the Labor Department,” reported CBS News

It’s all about wages

But the caveat is that wages are now at 3.4 percent, far less than the rate of inflation of 4.2 percent, forcing many families to struggle with the cost of housing, food and gasoline, now averaging, due to the war on Iran at $4.16 a gallon/

"Slowing nominal wage growth suggests workers don't have the leverage to bid up their wages," Elise Gould, a senior economist at the Economic Policy Institute, a nonpartisan think tank, said in an email. "Even with low unemployment, the depressed hires rate means workers aren't finding new jobs to raise their wages."

“An upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week’s inflation numbers,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, to CNBC, and  “If those come in cooler than expected, the Fed will likely feel comfortable discounting potentially inflationary signals coming out of the labor market.”

Taking it in hand

Revisions to the monthly reports are expected, considering the collection period, from Labor, and there was the good news of an upward revision for June and July to the tune of 55,000. Taking that into account employers added 21,000 jobs in July.

These numbers “may corroborate that recent softness was temporary rather than indicative of a broader deterioration,” Jerry Tempelman, vice president of economic and fixed income research at Mutual of America Capital Management, said in a statement reported by The Hill.

“Net, net, the labor market is alive and well and generating thousands of new jobs to help keep economic growth squarely in the plus column,” said Chris Rupkey, chief economist at Fwdbonds,” according to CNBC reports.

Or does it? All of these reactions give a certain amount of not merely caution, but uncertainty among those on Wall Street, as well as Main Street, as to what the future means for the American economy. We are not in solid enough territory to make these claims, say critics.

Examining earlier reports, the dial has not moved much over the last several months and we are still harnessed to a “low hire-low fire” jobs based employment atmosphere, but also, in general, to the “K shaped” economy, with those at the top of the economic bar spending freely, while those at the bottom are treading water; and, especially with those populations facing cuts in Medicare and Medicaid, not to mention the cuts in the Supplemental Nutrition Assistance Program, that includes not only adults but their children, showing the road ahead is less travelled.

All politics are local

We can’t omit the intersection of politics into the nation’s economy, and we have this: “With two months to US midterm elections, consumers are likely to take grim notice this [Labor Day] weekend of historic pain at the pump,” averaging $4.19 across the country, according to Bloomberg reporting, “and well above the $3.80 per gallon drivers paid on July 4, the usual peak of summer driving season. Meanwhile, diesel prices rose to a record high of $5.85 a gallon; ”the latter affects the delivery of food across the county creating a singular point because for previous Septembers they have never risen that high.

Going even further, “President Donald Trump, who has publicly dismissed consumer concerns about high energy prices amid already elevated inflation, recently began to change his tune, saying gas prices are “important.”

Neale Mahoney, a professor of economics at Stanford University who worked on fuel policy in the Biden administration, appeared to agree: “The fact that we’re heading into the home stretch of election season with gas prices at historically very high levels, with no obvious signs of relief, should be very concerning to incumbent politicians.”

A look in the rearview mirror from The Hill, shows that, “Economists have pointed to lower net migration rates as a cause of stagnant labor data, as the Trump administration has carried out a widespread deportation campaign. The labor force participation rate has also declined by 0.5 percentage points from January, although it ticked up to 61.6 percent in August, the BLS reported Friday, strong numbers for this month’s Federal Reserve meeting.”

“August’s solid job growth is even more notable since the government cancelled Temporary Protected Status for Haitian refugees on July 27, forcing workers who used that status to qualify for authorization to leave the work force,” Bill Adams, chief U.S. economist for Fifth Third Commercial Bank, said in his press statement.

The question remains is how long can that growth last without these workers? Taking into account that in In July ICE arrears topped a record of 50,000 in July. And, If that trend continues the abatement of workers, albeit low income, will have a deleterious effect on the workforce.

“Graeme Blair, co-director of the Deportation Data Project says the uptick is due to [Mark Wayne] Mullin's change in tactics” and, "What we're seeing is an expansion in all of the different ways that ICE is detaining people," Blair told NPR. "They're arresting people at airports, at ICE check-ins, at immigration courthouses and this is the result of that."

AI, love it, or lose it?

Another area of close examination is the rise of AI data centers and the widespread criticism from environmentalists, and local communities concerned about the drain on water and energy sources. But, it’s the seeming drain on employment that is getting an equal share of attention as more and more entry level positions are now being handled by AI. 

In the not too distant past entry level workers were told to learn how to code, but that is now being generated by AI and employers are eager to harness this cheaper and more reliable source of labor. Annenberg Public Policy Center in Mid August found that 61 percent of Americans are opposed to their construction,

In June there was a Reuters/Ipsos poll that noted “Half of Americans fear that the ​rise of AI could put them or someone in their household out of work, according to a new Reuters/Ipsos poll ‌ that also showed widespread angst at how widely the technology is being adopted.”

Using data gathered over six days, it “found that 53% of Americans shared that worry, which was spread fairly evenly across respondents by age, gender and education level. Some 37% of respondents said they did not worry about this at all with the remaining 10% either unsure ​or opting not to answer the question.”

One important caveat: “Skepticism over AI runs higher among Democrats, whose party attracts more college graduates, than among Republicans, ​who have attracted more working-class voters since President Donald Trump's rise. Some 61% of Democrats said they worried about AI coming for jobs in ​their household, compared to 47% of Republicans.”

In a discussion of the effect of AI on American jobs, it was noted  by marketplace.org that AI does not automatically mean a job loss, or that it is a zero sum game.

“AI, as a technology itself, is different from technologies in the past,” said Nigel Melville, an associate professor at the University of Michigan who studies the socio-technical implications of AI. He said agentic AI’s capacity to mimic human behavior does separate it from previous technologies, but it’s hard to know how that will impact the labor market.”

Taking a step back, or perhaps forward, what remains is consumer confidence and The University of Michigan Survey of Consumers for August found that 51.7 pf Americans felt confidence in the economy. 

Surveys of Consumers Director Joanne Hsu wrote, in part, that, “Consumer sentiment confirmed its early month reading, falling about 6% from last month and landing about 11% below a year ago amid continued worries that inflation will remain elevated for the foreseeable future. Sentiment declines in August were seen for all political groups and were particularly acute among Republicans. Moreover, groups who are typically less-equipped to absorb increases in cost of living also exhibited stronger decreases in sentiment, including older consumers, lower- and middle-income consumers, and those with no stock holdings”.

In an August poll from the Economist/You,Gov found that 23 percent of US citizens feel that the economy is weak.

Oh, Canada

Furthermore, “Any re-escalation of trade tensions will likely exacerbate these trends." which brings us to the trade war with Canada, what the Wall Street Journal called, “the dumbest trade war in history,” and which has baffled economists, and as we noted last month, will cost American consumers dearly, especially in border states such as Michigan and Maine, both swing states in the upcoming November midterm elections, and critical for a victory by Trump.

As has been reported widely this came on the heels of early moves by the president during his first quarter of his second administration; and, while there was a pull back, of sorts, this resurgence seems to have no clear agenda, 

Let’s recall that  in June there was a fresh round of taxes on Canada: three new tariffs for 554 Canadians, “citing Section 338 of the Tariff Act of 1930 for the first time” and covering . .  alcohol, dairy and related goods, wood, electronics, furniture and plastics, hockey equipment, among other goods, including clothing, games, and art, all set to begin August 19 unless reduced, or modified through pending negotiations between the two countries.

At that time American households data research showed they could in effect face a $920 tax rate per household;and, for the bottom quintile the tax rate will rise by 0.8 percent points, and 0.6 percent for the top quintile according to TPC estimates.

The Peterson Institute reported in July that, “Cast aside by the new tariffs is the US promise and legal obligation of zero tariffs made in 2020 when Trump signed the United States-Mexico-Canada Agreement. Prices for the goods affected by these new tariffs, and others in train, could start rising in the runup to the November 2026 midterm election.  Many of the affected goods are currently subject to zero or very low tariffs, under the USMCA, other trade pacts, and the US tariff schedule bound in the World Trade Organization.”

Currently negotiations between the two long term allies is at a stalemate, and Canadian Prime Minister Mark Carney has said,"The attitude of ​the United ⁠States... has been one that the core Canadian industries either would be subsidiaries, effectively, of the United States industries, or (Washington) would put in ⁠place terms ​where those industries would be gradually wound ​down in Canada and wiped out," he said emphasizing that "Of course, we're not going to accept ​those terms."

What will Kevin do?

All eyes are now on the Federal Reserve and whether it will hold interest rates steady, increase, or cut them as the president wants. Kevin Warsh, who succeeded Jerome Powell as Fed Chair, has stressed that he feels the central bank should be independent from the executive branch, but some observers are not so sure.

“Warsh himself has said the president has had no impact on his decisions and, in July congressional testimony, cited the Fed holding rates steady and not cutting as evidence of the central bank’s independence. At the same time, Warsh has said that the president and other politicians have a right to comment on Fed policy,” according to a CNBC report.

What is paramount is how the Fed can meet its twin mandate of full employment and keep inflation below 2 percent, a goal that we have seen is becoming increasingly challenging.

Current rates are between 3.50 to 3.76 and most predictions are for a hike, contravening Trump’s wish and has threatened to cut off trade with several countries unless there are rate cuts, and has said:

“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” he wrote in a post on Truth Social. “A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT.”

“Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE!” he added. “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

“Traders are now pricing in a 60 percent chance that the Fed hikes rates by a quarter point at its next meeting this month, according to CME FedWatch, which tracks bets placed on future central bank decisions,” reported The Hill, and in what appears to be a threat the president added, “The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change,” and “High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”

The next release of the Consumer Price Index will be on Sept. 11 and the Federal Open Markets Committee meets on Sept. 15-16. Till then it's all conjecture.

July Jobs Report shows a loss

Friday's July Jobs report from the US Labor Department sent shock waves reverberating across a range of people in government, universities, think tanks, banks and Wall Street with the loss of 23,000 jobs; but, in actuality, as the report stated things “changed little,” from June, but, in and of itself, with standard revisions and no rambunctious hiring, the loss was not a great surprise. It is worth noting that just under 70 percent of businesses responded to the government survey, the highest in more than two years, despite a loss of respondents over the long term, making this report especially significant for evaluation.

Those customary revisions showed April and May down to a cumulative loss of 103,000 bringing the monthly average for this year to 60.000 gains.

For some observers there was hope that with the March and April reports seeming to show a surge in hiring, that July was destined to sustain that growth. Even with that in mind, a review of the recent economic landscape of the US shows sustained blows to not only employment, but the immigration crackdown that deported hundreds of low skilled labor,  the yo-yo tariffs, and the Iranian war - in particular - things could have become much worse.  The current round of talks is not guaranteed to open the Strait of Hormuz freeing the transport of oil and fertilizer, important components of transportation, and production across the world, but especially in the US where gasoline prices, on average, have been as high as $4.69 per gallon of regular gasoline.

The unemployment rate at 4.1 is also little changed, but there is legitimate concern that further employment losses joined with the high rate of inflation and its effect on interest rates can cause headaches from Main Street to Wall Street as hundreds of American working families face not just high grocery and gasoline prices, but expensive costs for housing, whether buying, or renting, especially in urban areas, showing that affordability is not a political buzzword.

“We have a labor market that’s stable but stuck in second gear,” said Lydia Boussour, a senior economist at the consulting firm EY-Parthenon. “We still have an environment where those supply shocks are working their way through the economy, and a lot of uncertainty, and that will keep businesses cautious in hiring,” reported The New York Times.

While companies are not slashing payrolls, the “low hire-low fire” atmosphere cannot remain indefinitely, just as an economy sustained by high income consumers is not viable as it threatens to jettison the middle class.

“This kind of equilibrium can’t hold indefinitely. A market frozen between low hiring and low firing is only stable as long as nothing pushes on it. Should demand soften, the lack of hiring leaves no cushion to reabsorb workers who lose their jobs, and what now reads as a quiet labor market could tip into a rising unemployment rate quickly. The low-hire, low-fire dynamic has been remarkably durable, but durability isn’t permanence. The longer it persists, the more it’s worth watching for the first sign of which direction it finally breaks,” as we reported from the Hiring Lab in May,

One aspect getting a lot of attention in the last few months are hourly wages which “grew 3.5 percent 3.2 percent over the year, the slowest pace since May 2021 and likely less than the rise in prices over the same period,” added the Times.

Current inflation as of this date is 3.5 percent, down from 4.2 in May, according to the US Bureau of Labor Statistics.

The July price index will be released on August 12, and that will be a bellwether for further analysis, and predictions for the American economy.

One move that will please the White House is the growth in construction, but that is focused less on residential, but more on the construction of those controversial AI data centers, to the tune of 22,000 jobs; but, even with environmental concerns on water and electricity usage, this horse is out of the barn and is unlikely to return.

“There is no parallel in American history for the boom underway in the construction of data centers, fueled by companies with functionally unlimited cash that are racing to supply skyrocketing demand for their A.I. models, “ reported the Times.

According to Kush Desai, a White House spokesman, who said in a statement, “The Trump industrial resurgence is on schedule,” and is “unleashing more private-sector growth through President Trump’s proven economic agenda of tax cuts, deregulation and energy abundance.”

“It’s a sharp reversal from what we’ve seen in the past,” said Glassdoor chief economist Daniel Zhao. exercising some caution by saying “It’s also coming at a time when there’s an incredible amount of hype in the tech industry around data centers, and it’s just not showing up in the employment numbers.”

Healthcare is still reigning supreme in job growth, and, with our ageing population, is bound to continue; but, in some geographic areas, especially in the South, many of these jobs will suffer a loss with the end of the Temporary Protection Status for Haitians who make up a considerable bulk of health care employees, especially in nursing homes. This may have accounted for a slower growth of 22,000 jobs.

Of equal concern, especially to the Federal Reserve, is the Labor Force Participation rate, for workers between the ages of 25 and 54, and while July gave only a slight increase of 61.4, the employment ratio of 58.9 decreased by 0.4 percentage point. 

June showed a fall of six tenths of a percentage point, for the LFP, the largest “one-month drop in more than 70 years outside of the pandemic,” bringing the total net loss of the LFP to a decline of 0.7 percent since January,

Also falling is the leisure and hospitality industry, as American families, and individuals, face higher inflation, and with weakened wage growth, those dinners out, hotel stays, and bar events are taking a downward trend from a once solid area of growth (it dominated for many months) with a loss of 80,000 jobs, which didn’t get the anticipated World Cup bump.

Threatening to eat further into American pocketbooks are tariffs which have taken a new turn after the US Supreme Court, in February, struck down the tariffs that President Trump had created under the International Emergency Economic Powers Act; and, on July 23 using a broad interpretation of Section 301 the US is adding tariffs “relating to forced labor that covers over 80 trading partners. The Tax Policy Center (TPC) estimates that these finalized provisions will raise $581 billion over 2026-2036 (less than the draft version of the tariff). The rate varies from 10 to 12.5 percent and is applied preferentially for certain trading partners, many of whom have previously signed a trade agreement with the administration.”

Critics have been quick to point out that this is a pretext from the administration to reestablish the tariffs that SCOTUS eliminated,

Earlier in June there was a fresh round of taxes on Canada: three new tariffs for 554 Canadian products, “citing Section 338 of the Tariff Act of 1930 for the first time” and covering alcohol, dairy and related goods, wood, electronics, furniture and plastics, hockey equipment, among other goods, including clothing, games, and art, all set to begin August 19 unless reduced, or modified through pending negotiations between the two countries.

“Prices for the goods affected by these new tariffs, and others in train, could start rising in the runup to the November 2026 midterm election. Many of the affected goods are currently subject to zero or very low tariffs, under the USMCA, other trade pacts, and the US tariff schedule bound in the World Trade Organization,” reported the Peterson Institute.

American households could in effect face a $920 tax rate per household;and, for the bottom quintile the tax rate will rise by 0.8 percent points, and 0.6 percent for the top quintile according to TPC estimates.

With growing uncertainty about the tariffs urban centers such as Chicago have seen less economic growth than forecasted, due to tariffs and high borrowing costs late last year, and with these new tariffs looming on the horizon its effect on employment is bound to reverberate, as they did in 2025 when Gus Faucher, PNC Chief economist told Crain's Chicago, “There are a lot of interest rate-sensitive industries in Chicago, a lot of internationally focused industries in Chicago. And so tariffs, high interest rates have been more of a drag on Chicago than in the national economy."

Interest rates continue to be a hot topic for observers and at its last meeting the Federal Reserve Open Markets Committee has kept rates the same as it did last month holding them at 3.5 percent to 3.75 percent, but there was dissension with three members saying that borrowing costs should have been raised to ease inflation.

That traditional 2 percent target range for inflation “has overshot that level for half a decade and has moved further away from it over the past year; not only because of the Iran War but also President Trump's tariffs and other factors,” reported the Times.

Price stability is a concern of new Fed chair Kevin Warsh, but so far we have not seen how he will deliver it despite his statements to make price stability the main focus of his tenure.

In July before members of Congress he said,”When prices go up, I know it hits your constituents every day. I'm not trying to sound dismissive of it, but I also don't want to say that there's much that we can do about cattle prices or milk prices today. But there's a lot we can do to make sure that the entire grocery aisle doesn't have higher prices, and that's what we're committed to do.”

One day at a time with June Jobs Report

Thursday’s release of the Jobs Report for June by the US Labor Dept, provided a surprise showing of only 57,000 non-farm jobs giving some observers, including economists, as well as lawmakers, concerns, since 110,000 were predicted; and, with the revisions to April and May, there was increased concern about the overall economy.

While one report is not a predictor, the added complexity has created equal concern for the markets and later actions of the Federal Reserve Bank at its meeting later this month.

Reactions have been mixed: “Overall, this report shows a job market that is a bit shakier than the May data had indicated, but inflation still remains too high,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association, reported The Hill.

Inflation is the boogeyman and at 4.2 percent, it has become a significant factor in how middle and lower income American families feel about the economy, and as we’ve reported the last few months, it is still a K shaped economy, with those at the lowest bar struggling to afford rent and groceries although there is slightly less concern with the lowered gas prices - about 50 cents less - than before the Israeli-American led war against Iran, but with the fragile understanding, and disagreement about progress by Iran, that outlook could change.

Supporting the more positive view of the economy, “The University of Michigan Consumer Sentiment index was revised higher to 49.5 in June 2026, up from a preliminary reading of 48.9, although it remained slightly below forecasts of 50,” but Surveys of Consumers Director Joanne Hsu reported that, “. . .  sentiment remains in unfavorable territory at 13% below the February 2026 reading prior to the start of the Iran conflict, and nearly 20% less than a year ago. The cost of living remains at the forefront of consumers’ minds; for the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.”

Wages are now at a 0.3 percent increase of 13 cents totaling $37.64 but it’s not enough to keep up with the rate of inflation, “Over the year, average hourly earnings have increased by 3.5 percent. In June,average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents, or 0.2 percent, to $32.38,” BLS noted.

Of equal concern is the labor participation rate that sank to 0.3 percent, 61.5 percent, a figure closely watched by the Feds, and of concern for economists as it takes course among the financial markets as a bellwether of its confidence.

"June job gains slowed but did not collapse and unemployment edged lower for the wrong reason. That doesn’t do much to reassure new grads but job gains are still well above last year -- the threshold is low and wages have gotten sticky. Those gains are reinforcing the floor under service inflation, which will further agitate hawks at the Fed. Financial market hopes that the Fed will not hike in response to the report are misplaced -- we still expect two hikes by year end. July was not an active meeting for a rate hike in our forecast,” said Diane Swonk, chief economist at KPMG U.S to Investing.com.

Adding to the plurality of opinions is Mohamed El-Erian, former CEO of PIMCO who added that,"Combining (the nonfarm payrolls and unemployment rate) with other data in the report -- including a dip in labor force participation to 61.5% and 3.5% earnings growth -- suggests that the supply-side of the labor force was the primary driver for the miss in job creation. As to implications for Fed policy, this should dampen market expectations for a rate hike this year -- a scenario I have argued was a misreading of the Fed’s likely stance."

“It can be simultaneously true that employers are adding jobs amid a fairly stable labor market and you are having trouble finding work,” explained Elizabeth Renter, senior economist at NerdWallet.

“Paired with the very real affordability constraints brought on by inflation and right now could be a painful time for the 7 million people who are out of work.”

While statistics might be seen as less of a concern outside the statistical stratosphere of the BLS, the 4.2 unemployment rate belies many other worries, but there is hope among others, and “Gregory Daco, the chief economist at EY, a consulting firm, said he anticipates job growth will stabilize at approximately 70,000 per month for the rest of the year, and the unemployment rate may edge up, but only slightly,” according to The New York Times.

Add to the picture, one of caution, with most people staying in their jobs, rather than seeking out a new one for fear of failing to find another.

The White House must be watching all of this with cautious optimism considering the low polls of President Trump’s handling of the economy, a June 2026 NPR/PBS News/Marist Poll, said only 33% of Americans approved of how Trump is handling the economy, his lowest-ever economic approval rating on the issue since Marist began asking the question in 2019; yet ,“Kush Desai, a White House spokesman, said the jobs report “reinforces that the American labor market remains solid thanks to President Trump’s economic agenda. In his post on social media, he called particular attention to the slight uptick in manufacturing jobs last month.”

A look at the prime age employment (ages 25 to 54) ratio of 80.2 for June is especially troublesome, and along with their LFP loss of 83.3 that falling rate combined with the overall rate of 0.6 percentage points, seems as if might be an outlier, “the biggest one-month drop since 2009, outside the pandemic plunge. The number comes from the survey of households, which is more volatile than the business survey, and it’s possible (even likely) that the figure was a fluke and will reverse next month. But it’s a very odd reading, especially after a period of remarkable stability in the measure,” opined The Times.

“The leading reasons why prime-age adults (ages 25–54) are not in the labor force are care-giving responsibilities and personal health issues or disabilities. According to data from the U.S. Census Bureau's Current Population Survey (CPS) and independent polling, these two factors account for nearly 72% of the reasons why prime-age adults opt out of looking for work,”

Child care, especially compared with other countries, where subsidies are often the norm, combined with the high cost of American healthcare are credible reasons and with recent changes to coverage for many people, a choice between trying to work but finding less opportunities and with most employed people staying put, it’s easy to see, that for some, especially with a wage earning spouse, or partner, might result in this change of 720,000 people leaving the workforce.

While leisure and hospitality took a hit, not getting the expected World Cup bump, professional and business services gained, and in areas where AI was expected to decimate, it did not occur. That increase of 36,000 might not be a predictor, but it shows that the AI degeneration that many have feared is not here yet.

Health care increased at 22,000, although at a slower pace than seen before the previous 12 months at 38,000.

Again, one report is not a predictor, but the analysis of the June report along with the revision of March to 129,000 from 172,000 and April from 176,000 to 143,000, even accepting revisions as standard procedure is giving some economists pause, but especially with that drop in labor participation, from the household survey which gives a more accurate portrayal of American jobs than the business survey, the next quarter will bear watching.